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Insurance Marketplace Realities 2019 — Product recall

Ubezpieczenie kredytów, ryzyka politycznego i ryzyka terroryzmem

N/A

November 6, 2018

As the product recall marketplace grows more sophisticated, companies are increasingly evaluating their worst-case scenarios and how coverage can support their balance sheets should their reputations be compromised.

Rate prediction

Trend

Range

Product recall

Flat to +5%

Key takeaway

As the product recall marketplace gs more sophisticated, companies are increasingly evaluating their worst-case scenarios and how coverage can support their balance sheets should their reputations be compromised.

The product recall marketplace continues to harden but at a slow pace.

Frequency and severity of loss continue to steadily climb.

Market capacity has stabilized since a major market exit in late 2017. While M&A activity has involved product recall carriers, we have seen little ripple effect, likely because in many cases the merging carriers have maintained their separate books of business.

Carriers rarely deploy their full capacity on any given risk as they seek to better manage their overall risk portfolio.

Contracts increasingly require suppliers to include recall in their insurance portfolio.

Retailers and distributors, including grocery chains, are more cognizant of recall exposures impacting store sales.

Auto manufacturers are passing recall responsibility down to tier I and II supply companies.

Negative media attention magnified by online and social media reaction is intensifying contamination and recall losses.

Large-scale ingredient recalls are impacting high-profile food manufacturers, though in many instances there are no actual product defects but rather plant and/or manufacturing deficiencies at suppliers.